Retail sales posted unexpected 0.3% decline in May as inflation hammers consumers

The Commerce Department reported that retail sales were negative in May.

The decline in retail and food service spending was less than expected. Excluding autos, sales were up less than expected.

The numbers are not adjusted for inflation which increased 1% for the month on the headline number

The downwardly revised 0.7% increase from the initial 0.9% estimate was the reason for the lower than expected sales in April.

Spending for the month declined even though sales at gas stations increased 4% due to fuel prices that scaled new heights with regular unleaded hitting $4.43 a gallon in May and now running around $5 Motor vehicle and parts dealers experienced a decline.

Online stores experienced a 1% decline in sales. A broader trend has seen spending gradually shift from goods to services in bars and restaurants.

Spending and higher prices have put a floor under the sales numbers. Consumers have been able to use savings to make up for higher costs.

On the same day as the retail release, the Federal Reserve is expected to raise interest rates. The consumer price index for May was the highest since 1981 and well above the Fed's 2% target.